Extell leads air rights rush as prices soar

The average price of air rights in Manhattan jumped 47 percent year-over-year — to $305 per square foot in 2013 — as the ballooning price of land pushed developers to build taller. Gary Barnett’s Extell Development did the most air rights deals of any developer last year.

Extell conducted seven of the transactions for a total of 167,915 square feet – or about 27 percent of the total air rights market, according to a new report.

In some cases, air rights, which used to trade at about 60 percent of the price of land, sold at par with dirt, according to M. Myers Mermel, CEO of real estate advisory firm Tenantwise, which prepared the report. Land generally still trades at a premium though – 2013 land prices in Midtown were between $500 and $600 a foot, according to Mermel.

About 40 percent of the 34 air-rights deals in 2013 in Manhattan were for residential condominiums, while rentals made up 16 percent and hotels accounted for 36 percent, according to the report. Air rights, Mermel told the Wall Street Journal, “are the top revenue producers in any building because they become the new upper floors. You can get higher prices because top floors are the most expensive in any building.” [WSJ]– Hiten Samtani